That sounds like your up/down motion is way too exaggerated, and from your description will likely cost you in terms of speed and power. I have a copy of Gen. Choi's encyclopedia at home and it has a short section on sine wave. The motion, as depicted in pictures, seems very natural. I'll try to remember to take a look through the section tonight and give you a better description of how Gen. Choi envisioned the use of sine wave.

Edit: I reviewed Choi's text, and the accompanying photographs, and it appears that the up/down movement should, generally speaking, not be more than a couple inches. According to the text, when in the transition at the top of the sine wave, the knees should still be bent about 30 degrees. The way we've learned it, the movement is fairly subtle, just a slight exaggeration of the natural up/down movement when transitioning between stances. Our instructor is fairly old-school, and, at least through the 1st dan curriculum, tends to emphasize hip-twist more than sine wave.